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Wednesday, 2 September 2015

10 ways to 'chill out' during the market downturn

Yep, I have jumped on the bandwagon on touching on the market downturn. Its ugly, its nasty but it has been a long time in coming.

DBS trading at 2x P/B along with STI hitting 52 week high back around April with negative growth outlook should have sounded the alarm bells.

But anyhow if this is your 1st market downturn, heres some ways to chill out during the turmoil.

1. Stop logging into your brokerage
I make it a point to check my portfolio once a week or whenever i feel like it.

Unlike my friends that like to 'monitor' their portfolio (like what the hell is that supposed to mean), I stick to the plan of

1) Knowing my buying/selling/taking loss/profit price before I bought the stock.
2) Set alerts when it hits/gets close to these prices
3) Allow an indulgence of 3 days of looking at the stock price after i bought/sell it
4) Delete the shit out of the stock from my price watchlist
5) Do something when my price alerts tell me to

(Just to clarify this still means keeping updated about the company's news, but not the price)

2. Check out your friends facebook feeds
No really, its fun. Suddenly everyone becomes an expert on China and people that don't follow the market all have a view.

4. Record this down in your diary
During the EU crisis, I had a nice screenshot of my portfolio being down -20% which went back up to par few years later (eked out a small gain). It always good to remind yourself of the good/bad times

5. Read Warren Buffet quotes
Here's a link of not just the top 10, top 20, but 101 warren buffet quotes to soothe the soul

6. Count how many times Warren Buffet gets quoted in blogs during a market downturn
Why is it that no one quotes him during roaring markets thou?

7. Stop doing portfolio allocation
Ok bit 'controversial' here, but I don't really focus much on 'adjusting' portfolio allocation, because it means knowing whether stock markets are going to tank or recover, which I have zero butt shit clue.

My style of portfolio allocation comes naturally, when stocks are too expensive I don't buy and end up holding lots of cash, when stocks are cheap I buy and I have no cash.

And sometimes I have too much cash because I'm too lazy to hunt for bargains. Tadaa

I think Mr Buffet hits in on the nail when he says
“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

Yes I know he mostly refers to sticking to your circle of competence, but it also means stop looking for bargains that don't exist. Even if I've been in the market for 5 years, I have plenty of cards left to punch

8. Check out your friends facebook feeds
Sorry but its hilarious. Just a thought, if its time to sell when your taxi driver gives you stock tips, is it time to buy when you see your friends that don't invest panicking?

9. Update that shopping list
Remember the time when you did analysis of lets say comfortdelgro and your target price was @ $2.50 while the stock was at $3 and you started doubting yourself and revising your target price upwards?

Nows a good reminder of why you should not do that. Its fine when your buying price of a stock is 20%, 30%, 40% off the current price for a few years. When the prices come down it will come down, don't revise it upwards/downwards to make it more 'reasonable'

(P.S no I don't have comfortdelgro, and my target price is not at $2.50 either)

10. Take note of everyone's predictions
Whats more fun then predicting the market? Watching people predict the market!